i) Standard deductions:- From the net annual value computed, the assessee shall be

allowed a standard deduction of a sum equal to 30% of the net annual value.
ii) Interest on borrowed capital:- Where the property has been acquired, constructed,
repaired, renewed or reconstructed with borrowed capital, the amount of any interest
payable on such capital is allowed as a deduction.
The amount of interest payable yearly should be calculated separately and claimed as a
deduction every year. It is immaterial whether the interest has been actually paid or not paid
during the year. [Circular No. 363, dated 24.06.1983]
Interest attributable to the period prior to completion of construction: It may so happen that
money is borrowed earlier and acquisition or completion of construction takes place in any
subsequent year. Meanwhile interest becomes payable. In such a case interest paid/payable
for the period prior to the previous year in which the property is acquired/constructed will be
aggregated and allowed in five successive financial years starting from the year in which the
acquisition/construction was completed.
Interest will be aggregated from the date of borrowing till the end of the previous year prior
to the previous year in which the house is completed and not till the date of completion of
construction.

Deductions provided under Sec.24

The deductions under Sec. 24 include standard deduction and interest on borrowed capital
and no other deduction is allowed from net annual value.
Any amount paid for brokerage or commission for arrangement of the loan will not be
allowed as deduction. [Circular No. 28, dated 20-8-1969].
Example: ABC owns 3 house properties situated in Delhi.
The particulars of the houses are as under:

Municipal Value

House I
Rs.
1,20,000

House II
Rs.
1,70,000

House III
Rs.
2,00,000

Fair Rent

1,60,000

2,00,000

2,40,000

Standard Rent

1,40,000

2,20,000

Actual Rent (per month)

12,000

18,000

21,000

Period of vacancy

Nil

1 Month

6 months

Municipal taxes for the year

20% of Municipal 40,000

value

50,000

Municipal tax paid during the year

24,000

30,000

80,000

Compute the income under the head house property of all the 3 properties.
Solution:

source : www.trpscheme.com

(As amended by Finance Act, 2013)